What Is Meant by Bind Insurance Policies?

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If you are looking for insurance coverage, you may have heard that some agents can "bind" policies. Understanding this term will help you know which options you have available.


A binder is an oral or verbal agreement of coverage issued by an agent or insurance company before a policy has been officially issued.


A binder allows a customer to obtain insurance coverage without waiting for an insurance company to process the application and issue policy documents.


A binder benefits a customer by providing coverage quickly--coverage usually begins at 12:01 a.m. the day after the binder is issued. It also allows a customer to get insurance coverage without an immediate payment.

Binding Authority

An insurance company may only grant an agent binding authority in certain circumstances. Binding rules vary from company to company.

Conditional Coverage

A binder is only valid if the company accepts the applicant and the premium is paid by the agreed-upon date. If these conditions are not met, the binder is deemed void from inception, which means that no coverage ever existed.